A.M. Best Affirms Nationwide Ratings.

Business Editors

OLDWICK, N.J.--(BUSINESS WIRE)--March 30, 2000

A.M. Best Co. has affirmed the financial strength ratings of Nationwide Group, Columbus, Ohio, and its affiliated companies.

The rating actions follow an announcement by Nationwide Mutual Insurance Co. that it has reached an agreement to purchase Gartmore Investment Management, plc from the Royal Bank of Scotland Group, plc. The transaction--valued at $1.6 billion to be paid in cash--will be funded with excess capital maintained by the organization. There are no immediate plans to incur debt to finance this transaction. Nationwide Mutual, however, has extended an option to Nationwide Financial's subsidiary, Villanova Capital, Inc., to purchase up to 30% of Gartmore. The option will extend for five years and is contingent on Gartmore's ability to reach specific sales and revenue targets.

Although the group's financial leverage will remain within acceptable levels for its financial strength ratings, A.M. Best does note the negative impact this will have on the organization's capitalization and earnings in the near term. Approximately $1.4 billion of goodwill produced by this transaction will be written-off immediately, thereby reducing Nationwide Mutual's excess capitalization by the same amount and lowering its investment income. However, A.M. Best believes that this acquisition is strategically important to the organization as it is expected to provide a more diverse and growing source of earnings and capital accumulation over a longer time horizon.

Nationwide's strong franchise value and name recognition have allowed the organization to build a dominant position in the personal lines property/casualty market and a growing presence in the life and retirement savings fields. These strengths along with the organization's generally improving operating performance trends and adequate pro forma capital position, in light of this transaction, support Best's ratings affirmations.

The acquisition of Gartmore Investment Management will accelerate Nationwide's presence in the global asset management marketplace. It will provide the organization with the scale, brand recognition and historical investment performance that is necessary for Nationwide to compete effectively in the asset management arena. A.M. Best also believes that Gartmore should provide an important platform for Nationwide Financial Services and its asset management subsidiary, Villanova Capital, Inc., to expand its product and distribution capacities. In addition, the transaction should provide an opportunity for growth of the Gartmore funds, as it will have access to Nationwide Financial's extensive distribution channels--which include independent financial planners, wirehouses, fund supermakerts and exclusive Nationwide agents.

Gartmore was incorporated in 1969 and operates as a London-based investment management services company with more than $85 billion in assets under management. The company offers comprehensive investment services covering the world's major equity, bond and currency markets. In addition to London, the company also maintains offices in the United States, Japan and Germany.

A.M. Best will monitor the progress of the organization achieving its expected synergies from this transaction. Its ability to do so will be important in enhancing its earnings capacity and capitalization to levels that are more firmly within A.M. Best's expectations for Nationwide's current ratings.

This agreement is subject to regulatory approval, which is expected to close by the end of the second quarter of 2000.

The following property/casualty companies are members of the Nationwide Group and their A+ (Superior) ratings were affirmed in connection with this announcement:

-- Allied Life Insurance Co.

-- Employers Life Insurance Company of Wausau

-- Wausau Preferred Health Insurance Co.

Also the following property/casualty ratings were affirmed:

-- Allied Life Insurance Co.

-- Employers Life Insurance Company of Wausau

-- Wausau Preferred Health Insurance Co.

The following life/health companies are members of the Nationwide Group and their A+ (Superior) ratings were affirmed in connection with this announcement

-- Allied Life Insurance Co.

-- Employers Life Insurance Company of Wausau

-- Wausau Preferred Health Insurance Co.

Also the following life/health A (Excellent) ratings were affirmed:

-- Allied Life Insurance Co.

-- Employers Life Insurance Company of Wausau

-- Wausau Preferred Health Insurance Co.

A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com.